Tallgrass Energy Secures Oil Shipper Contracts for Pony Express Pipeline

HOUSTON (Reuters) – Tallgrass Energy LP has secured contracts for shipments of 165,000 barrels per day (bpd) on its Pony Express pipeline as it recontracts portions of the line, an executive said on Wednesday.

The Leawood, Kansas-based pipeline operator contracted the shipments around $2.50 a barrel for terms ranging from three to five years, Bill Moler, president and chief operating officer told investors. The company is in advanced discussions to contract another 70,000 bpd near those rates, he added.

The Pony Express pipeline, which began service in 2014, originates in Guernsey, Wyoming, and terminates at the main U.S. oil storage hub in Cushing, Oklahoma. It also runs through Colorado, Nebraska and Kansas and receives crude produced in the Bakken, Denver Julesburg and Powder River oil fields in the U.S. Midwest.

“It’s been a very competitive environment. We’ve fought hard for those barrels. We’re getting close” to securing the additional shipper contract now under discussion, Moler said.

The oil shippers under new contracts are spread out geographically, though the company could not disclose their locations, Moler said.

Based on recent speed tests, Tallgrass may be able to expand the pipeline’s total capacity to 450,000 bpd from around 400,000 bpd, he said.

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